Photo credit, Getty Images
From building a new gold refinery in Ethiopia to building a multibillion-dollar oil refinery in Kenya, many African countries are increasingly looking to add value to their resources by processing them locally rather than selling them in their raw state.
These developments are part of a broader effort to strengthen domestic industries, create jobs and reduce dependence on imports through the processing of products from African resources.
In Ethiopia, a gold refinery, costing more than $50 million, should allow the country to process its gold locally before selling it on international markets.
The Ethiopian government has also partnered with Nigerian billionaire Aliko Dangote to build a fertilizer factory. At the same time, construction of an oil pipeline linking Ethiopia to Djibouti began. This project, worth more than $660 million, is expected to facilitate the transport of oil from the port of Djibouti to Ethiopia.
In Burkina Faso, Ibrahim Traoré recently inaugurated the country's first gold refinery.
This allows the country to take a new step in the management of its natural resources.
Beyond refining its own production, Burkina Faso also aims to become a regional gold processing hub.
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For its part, Kenya is continuing its project to build an oil refinery, the cost of which is estimated at around $16 billion. If completed, it will be the first of its kind in East Africa. These projects demonstrate a new direction, whereby African countries no longer want to rely solely on the extraction and sale of resources, but also want to develop industries capable of producing higher value-added goods.
“Africa must build its own future”
It is rare to talk about this ambition without mentioning Aliko Dangote, one of Africa's biggest investors.
“We cannot build a stronger Africa if we continue to depend on others,” Dangote said.
“No one from the outside will come and build a better Africa for us. It is up to us, Africans, to achieve this.”
Dangote, whose investments span sectors such as cement, power, fertilizer and transport, is involved in some of the continent's biggest industrial projects.
He believes that African countries should process their resources locally rather than exporting raw materials without processing them and then buying manufactured goods from abroad.
“It is time for Africa to wake up and focus on developing its economy,” he said.
However, Dangote emphasizes that trade barriers remain one of the main obstacles to the continent's economic growth.
“A major challenge to Africa's economic development lies in the barriers that hinder the movement of people, goods and services between African countries. I hope that the African Free Trade Agreement will help resolve this problem,” he concluded.
“We want to refine all our metals on site… we want to have the entire value chain on site”, for his part, declared Ibrahim Traoré during the inauguration of the refinery in Ouagadougou.
Efforts to increase resource value
Experts say efforts to add value to resources through local processing are not new.
Marit Kitaw, a mining policy specialist at the Economic Affairs Division of the United Nations Economic Commission for Africa, attributes this trend to the launch of the African Mining Vision in 2009.
This plan aimed to address a long-standing challenge: despite the vast mineral wealth of many African countries, mining revenues have not led to widespread industrial development or significantly improved citizens' living standards.
Mwendia Nyaga, an energy consultant, explains that Africa's population growth is also forcing governments to look for new avenues to stimulate economic growth and create jobs.
With millions of young people entering the workforce each year, countries are challenged to expand economic opportunities and build industries capable of employing more people.
"For many years, developing countries exported raw materials and then imported processed products," Nyaga said.
"The idea of reducing imports by producing these products locally has not been a priority. The policy changes we are seeing now can help reverse this trend."
From gold mining to local refining
Photo credit, FCB
Gold illustrates the efforts made by African countries to develop their economies based on natural resources.
From South Africa to Ghana, Uganda, Burkina Faso and Ethiopia, these countries are investing in domestic gold refineries rather than exporting raw gold for processing.
Currently, 14 African countries have gold refineries.
The Rand refinery in South Africa is the largest and oldest on the continent. Since its founding in 1920, it has refined around a third of the world's gold.
Ethiopia is among the latest countries to join this list.
The Ethiopian National Precious Metals Refinery, located in the Bole Lemi industrial zone in Addis Ababa, is expected to refine gold for domestic and international markets.
According to officials, at full capacity, the plant will be able to refine up to 600 tonnes of gold per year.
Dr Marit says the benefits of this project go beyond just export earnings.
“This project will create more jobs for young people and women, contribute to the development of local skills and facilitate access to modern technologies and knowledge,” he says. However, experts warn that the mere presence of refineries will not be enough to transform African economies. Countries need to build larger industrial systems, exploiting existing resources to produce a diverse range of products.
Dr Marit cites the example of Ethiopia's phosphate reserves. Instead of exporting raw phosphate, he explains, the country could use it to produce fertilizer locally. This would make it possible to add value to the resource and reduce its dependence on imports.
Ethiopia has launched a project to build a fertilizer factory in Somaliland, in partnership with the Dangote Group.
For a country long dependent on imported fertilizers, this project illustrates how natural resources can be combined with industrial activities to produce goods with higher added value.
Economist Marid Tulu says food security, energy production and industrial development are increasingly intertwined.
He emphasizes that as Africa expands its energy production and strengthens its economic infrastructure, its countries will be better able to manage their resources and develop industries producing high value-added goods.
Why is regional economic cooperation important?
Experts say industrial development efforts in Africa will be more successful if countries cooperate rather than individually trying to build their own factories without considering the opportunities offered by their neighbors.
Dr Marit says regional markets play a key role in achieving this goal.
“If Ethiopia has a gold refinery, why should Tanzania invest so much money to build another one from scratch?” he asks.
According to him, Tanzania could instead send its gold to Ethiopia to be refined there. He adds that it is necessary to strengthen trade cooperation, share infrastructure and attract investors.
Examples of this cooperation are already visible in certain regions of the continent.
In southern Africa, the Lobito Corridor connects Angola, Zambia and the Democratic Republic of Congo (DRC) by rail and port, to facilitate the transport of minerals and other goods.
In East Africa, the LAPSSET corridor project, involving Kenya, Ethiopia and South Sudan, is among the key infrastructure initiatives aimed at strengthening regional economic integration.
Supporters of these projects say they could reduce transportation costs, improve access to markets and boost trade between countries. However, experts warn that major challenges persist and could delay the development of African industries.
Inadequate infrastructure, limited access to capital, electricity shortages and trade barriers continue to hamper production in many countries.
According to Nyaga, the transformation of the old economic system, long based on the export of raw materials and the import of processed products, will take time.
However, he sees Africa's large population and the expansion of its consumer market as a tremendous opportunity.
“Our greatest wealth is our people. We have a skilled workforce, a fast-growing economy and an expanding consumer market. This is an extraordinary opportunity,” he says.
Today, African governments, investors and policy makers are increasingly questioning the relevance of the system of exporting raw materials and importing processed products for the economic development of the continent.
The success of these changes will depend on access to capital, improved infrastructure, strengthening regional cooperation and effective implementation of development policies.
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